A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

April 30, 2008

Seriously, if BofA completes the CFC acquisition, you'll know something funny is going on with Hank Paulson and Ken Lewis. Countrywide is AIDS, Chlamydia, Genital warts, Herpes, Gonorrhea, Hepatitis and Syphilis all rolled into one. BofA would be dealing with lawsuits, losses and employees going to jail for years and years.

Watch for the other shoe to drop soon here. And watch for the FBI to announce formal charges against Countrywide execs, and Angelo Mozilo by the end of Summer.

And oh, get your popcorn.

Countrywide Financial Corp. said Tuesday it lost $893 million in the first quarter, as rising loan defaults amid a deepening housing downturn forced the nation's largest mortgage lender and servicer to sharply increase its provision for loan losses and book other credit-related charges.

Shareholders saw their stake in the company dwindle as Countrywide shares lost 80 percent of their value by the end of 2007. Shares had hit a five-year peak of $45.03 in February of that year.

Meanwhile, Mozilo was paid more than $22.1 million and cashed out $121.5 million in stock options last year.

Defaults Rising Rapidly For 'Pick-a-Pay' Option MortgagesBy RUTH SIMONApril 30, 2008(Wall Street Journal)On Tuesday, Countrywide Financial Corp. said that 9.4% of the option ARMs in its bank portfolio were at least 90 days past due, up from 5.7% at the end of December and 1% a year earlier. Countrywide also reported that it had charged off $125 million of these loans in the first quarter, compared with $35 million a quarter earlier. Bank of America Corp. said last week that it will stop making option ARMs altogether after it completes the acquisition of Countrywide Financial, which in recent years has been the largest originator of these loans.

"Here's another prediction - BAC is intending to use CFC as a "dumping ground" for its toxic waste, will keep the firm as a wholly-owned sub so it is legally distinct, will dump their trash in there and then BK the "subsidiary" with some swansong about how things were suddenly "worse than anticipated", keeping the servicing platform."

CFC spent $4 BILLION on stock buybacks to prop up share prices while insiders were dumping their stock hand over fist. Nobody can say they weren't warned. This took place over an 8 month period and there were many rallies where the longs could have sold.